ABSTRACT: The 2004 EC Merger Regulation (ECMR) adopted the substantial impediment
of effective competition test, and abandoned the earlier standard that
required proof of dominance as a necessary element to intervene in a
merger. It is said that this reform was necessary because the dominance
test failed to catch unilateral effects absent dominance, so there was
a 'gap' in the ECMR. This paper argues that the decision to amend the
ECMR was unnecessary. From an economic perspective because the
dominance standard was sufficiently flexible to address all
anticompetitive mergers. Economists' concerns about merger control (in
both the US and EC) was that authorities focused on a structural
assessment premised upon market definition and market concentration and
failed to give sufficient attention to other means to test for
anticompetitive effects in a more direct manner. Economists' support
for the new test is that it would place a focus on these other methods
for identifying anticompetitive effects. From a legal perspective, it
seems that the major motivation for reform was to divorce merger
control from the abuse of dominance doctrine in Article 82, so that the
two legal provisions would develop independently, the latter only
applicable to manifestations of significant market power. Accordingly
the view that there was a 'gap' in the dominance test is inaccurate,
and lawyers and economists supported the reform for different reasons.
This misunderstanding might explain why the Horizontal Merger
Guidelines designed to indicate how the new standard applies are
insufficiently precise. In an endeavour to offer some precision, the
paper reviews a number of decisions and suggests that the Commission
applies four distinct theories of harm, but the first major decision
applying the new standard is worrying because the Commission appears to
regulate the market rather than remove an impediment of competition
caused by the merger, with the risk that the new standard is so loose
that it allows the Commission to address questions of industrial policy
through the ECMR.